AUD/USD Weekly Fundamental Analysis, October 6-10 2014, Forecast

Weekly Analysis and Recommendation:

The AUD/USD ended the week at 0.8676 giving up 126 points on Friday after the release of US nonfarm payroll data sent the US dollar soaring. The AUD fell 6.5% in September as global growth concerns weighed on commodity prices and the U.S. outlook pressured interest rate differentials. In addition rising volatility and a collapsing currency saw the more vulnerable long holders (and carry traders) close out positions. The CFTC reported that over September the net long AUD position had dropped from $4.5bn to $0.7bn by month end. At the beginning of October, the AUD was testing technical support at its year-to-date low of 0.8660; the risk is further near-term downside before it stabilizes.

Economic growth in Australia was relatively strong in the second quarter of 2014, with real GDP expanding by 3.1% y/y. Momentum slowed in the April-June period when compared to the prior three months – resulting in a mere increase of 0.5% q/q. The slowdown was expected as weaker commodity prices notably that of iron ore, contributed to a downturn in the mining sector and lower investment activity. Further, the strong currency drove imports higher while bringing down the level of exports.

Traders will closely monitor the RBA decision early this week and the ongoing strength of the US dollar.

FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more recent analysis and information in our weekly reports and we provide daily updates and outlooks.

Historical: From 2011 to present

Highest: 1.1080 USD on Jul 27, 2011

Average: 1.0292 USD over this period

Lowest: 0.8890 USD October 2014

Events You Should Be Monitoring This Week:

CAD                      Ivey PMI

NZD                      NZIER Business Confidence

JPY                        Monetary Policy Statement

AUD                      Cash Rate

AUD                      RBA Rate Statement

JPY                        BOJ Press Conference

GBP                       Manufacturing Production m/m

CAD                      Building Permits m/m

USD                      FOMC Meeting Minutes

AUD                      Employment Change

AUD                      Unemployment Rate

GBP                       Asset Purchase Facility

GBP                       Official Bank Rate

GBP                       MPC Rate Statement

USD                      Unemployment Claims

EUR                      ECB President Draghi Speaks

CAD                      Employment Change

CAD                      Unemployment Rate

Upcoming Government Bond Auctions

Date Time Country 

Oct 07 06:00 Swiss Announces details of optional bond auction on Oct 08

Oct 07 09:00 Norway Bond auction

Oct 07 09:15 Austria RAGB auction

Oct 07 9:30 UK Auctions 3.5% 2045 Gilt

Oct 07 15:30 Italy Announces details of BOT auction on Oct 10

Oct 07 17:00 US 3Y Note auction

Oct 08 09:30 Germany Eur 4.0bn Oct 2019 Bobl auction

Oct 08 09:30 Swiss Bond auction (for decision)

Oct 08 15:30 Italy Announces details of BTP

Oct 08 17:00 US 10Y Note auction

Oct 09 09:03 Sweden I/L bond auction

Oct 09 17:00 US 30Y bond auction

Oct 10 09:10 Italy BOT auction